Why mining sector downturn may cost super funds billions

CLAIMS billions have been wiped from superannuation funds through investments into plummeting resource sector companies have an activist group urging people to rethink their financial management.

Market Forces, a Victorian-based financial activist group funded through donations, carried out a study recently which showed 15 major retail, industry and public sector fund options lost about $5.6billion - or up to $3024 per member - on fossil fuel company investments in the past two years.

Executive director Julien Vincent said the findings went to show just how connected the average person was to the mining sector downturn.

"I think after the Paris (climate summit) last year the whole financial magnitude of climate change and having an economy keeping global warming to less than two degrees, that really started to become more apparent," Mr Vincent said.

"Unfortunately, that conversation with most people, they kind of feel a bit divorced from it. And they're not. Their money, their investment, their super, they're all wound up in this."

He said Peabody Energy's filing for Chapter 11 bankruptcy in America last week was indicative of wider issues within the resource sector that super funds were ignoring.

Due to the public's raising concern about climate change, Mr Vincent said the investment in resource sector companies by super fund manager was not only a good question of financials, but morality.

"I've got super, if it's in a fund I want to know that my money is invested in companies that I agree with what they're doing," he said.

" People often express these sentiments as an individual but often not really appreciating how connected they are to these industries."

However, most super fund managers do allow clients to direct where their super is invested (see below).

"It's misinformation": Federal MP

But Federal Member for Dawson George Christensen put the Market Forces claims down to "green spin".

"Once again, it's misinformation that the Green movement are putting out to try and kill off coal jobs," he said.

"They want to knock public confidence in the mining sector and the end result of that is that more mums and dads in the Mackay region will be out of work.

"Market Forces tries to pretend that it can do impartial financial analysis, but they are an avowed anti-fossil fuel, anti-coal extreme green organisation."

Proactive about investment

Proactive Solutions accountant Andrew Zammit said while he wasn't a financial planner and couldn't offer advice where to invest, people were able to have a say where their money was invested, depending on the risk and return they were after.

"If a superfund investor wished to avoid a certain industry they could do this by selecting a fund that offered this as an option," Mr Zammit said.

" Most funds have a diversified spread of assets that would include some investments in various industries through domestic and international shares.

" Unless you have your super invested in a conservative or cash only superfund it would be highly likely that you would have exposure to the share market including resource companies.

" Your superfund would be able to provide you with further information as to what percentage of your super is in which industry group and investment type."

He also pointed out it was possible to direct super into ethically or socially responsible portfolions, which excluded tobacco or gambling industries for example.

He said self managed super funds were another option, but urged people to see a financial planner first to ensure they understood all the complexities involved.